Houston's multifamily sector is in high demand as supply cools off dramatically. In the third quarter, the region absorbed 10,293 units — up more than double from the same period 12 months ago, according to a report from Colliers. Additionally, that marks the strongest levels seen in four years. Most of the absorption came from Class A properties (4,393), followed by Class B, at 2,052 units.
"The surge in absorption contributed to increased occupancy levels overall and across all property types both quarterly and annually," Colliers explained.
Occupancy averaged 90 percent for multifamily in Houston, up 70 basis points.
Investment appetite was also strong, with sales volume hitting $1.2 billion, a 8.3 percent surge in the rolling four quarters. Moreover, the average sales price soared by 16.2 percent to reach $159,625. Cap rates decreased by 20 basis points to 5.8 percent.
"Houston’s multifamily market outperformed broader Texas trends, aligning more closely with national momentum in pricing and absorption," Colliers said.
The results come even after deliveries rose to 5,794, from the 4,931 posted a year ago. The Northwest saw the highest level of supply during the third quarter. However, construction is down 54 percent to 7,985 units, which is something that could bode well for future near-term performance.
And while modest, rents climbed by $13 to $1,285.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.